The most consequential development for the skills, apprenticeships and further education sectors in 2024 was, of course, the General Election in July. The Labour Party’s landslide victory gave the Government a mandate to take forward reforms promised in its manifesto, including the creation of Skills England, the transformation of the apprenticeship levy into the growth and skills levy and further devolution to local authorities in England.

Skills England and the Growth and Skills Levy

One of the changes the new Labour Government has implemented has been the creation of Skills England, a new arms-length body that will take on the current function of the Institute for Apprenticeships and Technical Education (IfATE). The Government wants Skills England to mend the “fragmented and broken” skills system and form a coherent national picture of where skills gaps exist and how they can be addressed. Skills England will follow in the footsteps of numerous national skills bodies trying to resolve the problems within the skills system.

The new Government is also turning the Apprenticeship Levy into the Growth and Skills Levy. This is part of wider apprenticeship reforms designed to boost opportunities for young people. The Growth and Skills Levy will also allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training than is available through the existing system – where apprenticeships must run for at least 12 months.

To fund this, the Government is asking employers to reallocate their apprenticeship funding and prioritise investments in younger workers. This will require businesses to cover a greater portion of the costs for Level 7 apprenticeships – equivalent to a master’s degree and typically pursued by older or highly qualified workers – beyond the scope of the apprenticeship levy.

Autumn Budget

In October, the first female Chancellor of the Exchequer, Rachel Reeves, delivered Labour’s first budget in more than a decade. Reeves announced significant tax rises, largely through employer national insurance contribution rises, to invest more into public services, in particular into the NHS, and for increasing government capital investment.

Included within this was a £40 million investment as part of initial steps to transform the Apprenticeship Levy to the Growth and Skills Levy, supporting the commitment of delivering shorter and foundation apprenticeships in key sectors. Meanwhile, Reeves also announced £300 million of additional funding for further education to help young people develop their skills and plug the various skills gaps that are holding the economy back.

Get Britain Working

Another significant step for skills in 2024 was the Get Britain Working White Paper, which the Government described as the “biggest employment reforms in a generation”. These are intended to address the 9.25 million people in the UK who are economically inactive, helping get more than 22% of the UK’s working age population re-engaged in the workforce.

One of the key reforms in the White Paper was to empower Local Authorities to play a more pivotal role in shaping local employment and skills strategies, with the flexibility of tailoring solutions to their regions.

The White Paper also revealed that the Government will transform jobcentres into hubs for career growth and will include a range of new services. These will include skills assessments to identify gaps and recommend training programmes, access to employer-led training initiatives for jobseekers to gain industry-relevant skills and enhanced job-matching capabilities powered by real-time labour market data.

Devolution

Most recently, the Government presented the English Devolution White Paper to Parliament. This was a long-awaited piece of legislation that set out plans to widen and broaden devolution across England, bringing greater parity within the system and strengthening local community’s ability to make decisions in their local areas.

One of the changes in the bill is the requirement for the newly created Mayoral Strategic Authorities to produce a Local Growth Plan, which will set out a long-term vision for growth in their region over the next decade.

Central to the Government’s approach is to provide Strategic Authorities the control of non-apprenticeship adults skills funding. For Mayoral Strategic Authorities, this will combine and un-ringfence funding for the Adult Skills Fund, Free Courses for Jobs and Skills Bootcamps from 2026/27 onwards. For Established Mayoral Strategic Authorities, this will form part of their Integrated Settlements from 2025/26 onwards. Foundation Authorities will continue to receive devolved Adult Skills Fund alongside ringfenced funding for Free Courses for Jobs and Skills Bootcamps. 

The Government has pledged to continue to ensure that there is a national and consistent approach to education and training for 16–19-year-olds. However, Mayoral Strategic Authorities will have a crucial role in ensuring there are clear pathways of progression from education into both further and higher education and local employment opportunities and the Government will work with Mayoral Strategic Authorities to develop the tools needed to support them in delivering this.

Looking ahead

This year will see many of these initial pieces of legislation come to fruition. The first changes from the Devolution White Paper are expected to take at least 12 months, whilst Skills England won’t be fully functional until approximately the middle of 2025, once the permanent CEO is appointed.  

Similarly, this year will see the Growth and Skills Levy take shape. The Government has signalled that Skills England will give employers greater flexibility to use levy funds or training and it is expected this flexibility will be clarified.

Another important fixture in 2025 will be Phase 2 of the Spending Review, which will outline government spending for 2026-29. This funding is expected to support the Government’s Plan for Change and is expected in the Spring. It is expected that this review will drive public sector reform and aim to root out public sector waste.

Overall, the sector should expect to see many of the reforms of the new government begin to take shape and have an impact. Whilst the sector is robust in its ability to adapt to these changes, the Government must remain committed to engaging with employers to ensure they are given the time and ability to successfully implement any required changes.